1. This is a petition under Article 226 of the Constitution by some of the Hotel-keepers of Visakhapatnam town praying for a writ of prohibition or any other appropriate writ against the Municipality to forbear from collecting water rate from them as provided by its bye-laws.
2. Under Sections 131 and I32-A of the Madras District Municipalities Act, 1920 (Act No. V of 1920) adopted by the State of Andhra Pradesb hereinafter to be referred to as the Act, the Municipal Council, Visakhapatnam framed bye-laws for the collection of charges for the supply of water to consumers in the town. Broadly stated, the residential buildings were permitted a free allowance varying with the annual rental value of the buildings and the water consumed in excess of free allowance was charged at the rate of Rs. 4/-per 1000 gallons or part thereof subject to a monthly minimum charge. With regard to water supplied to buildings other than residential buildings, they were not permitted any free allowance and water was charged for at Rs. 6/- per 1000 gallons or part thereof.
3. The hotel-keepers are the petitioners herein. They are aggrieved by what they alleged was unreasonable and discriminatory classification violative of Article 14 of the Constitution. They also alleged that Section 132-A of the Act conferred uncontrolled and unregulated power on the Municipalities to levy water rate at such rate as may be prescribed by the bye-laws from time to time and as such Section 132-A and the bye-lawsframed thereunder are invalid. It is therefore the case of the petitioners that the Municipality cannot collect water charges from them under the bye-laws framed by it and they pray for interference in these proceedings.
4. The Municipality in its counter-affidavit repudiated these allegations staging inter alia that the classification was based on reasonable basis that the supply to residential buildings was different from the supply to hotels and that further the 'water and drainage tax' paid as a component of the 'property tax' under Suction 81 of the Act was different from water charges payable for the use of water supplied to the consumers. The Municipality further stated that the charges levied for the supply of water through service connections inside the premises to a particular individual is different from the 'water and drainage tax'. The Municipality has further stated that under Section 310 of the Act, the bye-laws could not be given effect to unless they are approved and confirmed by the State Government, that that was a check on the Municipality acting arbitrarily and that further the Municipality had incurred a capital expenditure of 116 lakhs of rupees on the water scheme and have to pay the Government 6.8 lakhs of rupees towards repayment of loan in addition to 1.5 lakhs towards maintenance annually and that having regard to their expenditure and the liabilities, the rates were fixed.
5. Before we address ourselves to the contentions advanced in support of this petition, we may peruse the relevant provisions of the Act and the bye-laws in so far as they are relevant. Under Section 131 of the Act, the executive authority may, at his discretion on application by the owner or occupier of any building, arrange, in accordance with the bye-laws, to supply water thereto for consumption and use. The cost of making the connection and the cost or hire of meters shall be borne by the owner or applicant and shall be recoverable in the same manner as the property tax.
6. Section 132-A occurs tinder the heading 'payment for water' and states thus:
'132-A (1) For all water supplied under Section 131 payment shall be made on such basis, at such times and on such conditions as may be laid down in the bye-law made by the Council, and shall be recoverable in the same manner as the property-tax.
2 In particular and without prejudice to the generality of the foregoing power, such bye-laws may --
(a) provide for the classification of supply of water under the following categories, namely:
(i) supply of residential buildings;
(ii) supply to residential hotels;
(iii) supply to shops, commercial establishments (other than industrial undertakings) restaurants, eating houses, theatres and places of public amusements or entertainment;
(iv) supply to industrial undertakings;
(v) supply to non-residential buildings, not falling within the scope of category (ii), category (iii) or category (iv).
Explanation: x x x
(b) Provide for the levy of different rates of charge in respect of water supplied to the different categories specified in clause (a);
(c) in cases of supply to residential buildings lay down the maximum free allowance to be made and the rates of charge to be levied in respect of water supplied in excess of such allowance; and
(d) in case of supply whether to residential buildings or to other buildings of any category specified in Clause (a) lay down that the charge for water supplied shall be based on the number of taps allowed, irrespective of the quantity of water consumed.'
7. It may be noted in this context that Sections 131 and 132-A have been recast by the Amending Act, Andhra Act IV of 1956. The significance of this amendment is that wherever the clause 'supply of water for domestic consumption and use' occurred before, that was omitted by the amendment. By the said amendment the former classification of supply of water for domestic consumption and use and for purposes other than for domestic consumption and use ceased to exist.
Similarly Section 132-A was recast abolishing that classification. Original Clauses (a) and (by occurring in Section 132-A were relettered as Clauses (c) and (d) respectively dropping the words for supply to domestic consumption and use or for other property. Clauses (a) and (b) were inserted newly. We may take it therefore that under the section as it reads after the amendment supply to residential buildings is one category. Supply to residential hotels, shops, commercial establishments (other than industrial undertakings), restaurants, eating houses, theatres and places of public amusement or entertainment is a different category. Supply to industrial undertakings is-another category. Supply to non-residential buildings not falling within the scope of categories 2 and 3 is yet another category. We are referring to these in particular as one of the arguments advanced before us was that water supply to hotels is chargeable as for domestic consumption only. That argument would have been relevant before the amendment; but after the amendment that argument is unsutainable. Bye-laws 9 (a) and 10 (a) framed under Section I32-A of the Act have a bearing on this question. Bye-law 9 (a) provides for permissible free allowance for supply to the residential buildings. The daily free allowance in gallons varied with the rental value per annum. Bye-law 9 (b) states that the water consumed in excess of free allowance shall, be charged for at the rate of Rs. 4/- per 1000 gallons or part thereof subject to monthly minimum charges. Bye-law 10 (a) provided that in the case of water supply to other than residential buildings, all water consumed shall be charged for with no free allowance. The supply to residential hotels and restaurants, eating houses, etc., was charged for at Rs. 6/- per 1000 gallons or part thereof.
8. Now the first contention advanced by Sri. Ramamurthy is that there should be no discrimination in charging for water supplied to hotels as: essentially the water used therein was for domestic use. He has cited Metropolitan Water Board v. Avery, (1913) 2 KB 257 which was affirmed by the House of Lords in (1914) AC 118. That wasA case where water was supplied to a licensee of a public house where luncheons were served and water was used for cooking the food and washing up the plates and dishes. It was held that the water was used for domestic purposes within the meaning of Section 25 of the Metropolitan Water Board(Charges) Act, 1907 and the test of domestic purposes was said to be not whether the water wasconsumed or used in the course of the trade butwhether the user of the water was in its naturedomestic. Both these rulings were referred to andfollowed in Masulipatnam Municipal Council v.Brundavan Talkies, Ltd., : AIR1953Mad864 where the question was whether the water used bythe servants of the cinema, by the visitors andutilised also for the coffee hotel and latrines andflush outs located in the cinema premises was fordomestic purposes. As we have said, that was adistinction which does not survive after the amendment, and it is therefore unnecessary to pursue the matter further.
9. The objection to the classification is basedon the first contention referred to by us, the contention being that the classification for purposes of supply of water is unreasonable as the user ofwater was for domestic purposes in either case, whether it be in residential houses or in hotels, inasmuch as the arguments made with reference to domestic use do not survive after the amendment, this argument must fail.
10. It is manifest from Section 132-A of the Act (reproduced above) that the classification of supply of water falls broadly under three categories viz., supply to residential buildings, supply to non-residential buildings and supply to industrial undertakings. It is also evident from bye-laws 9 (a) and 10 (a) that the water charges are at Rs. 4/- for every thousand gallons or part thereof for residential buildings and Rs. 6/- per thousand gallons or part thereof for each of the other categories, that is to say, there is no difference in charge for any of the categories falling under non-residential buildings or industrial undertakings. It needs no further comment to say that this classification is reasonable and the complaint on the ground of unreasonable classification is untenable.
11. The next contention of Sri Rama Murthy is that there is no nexus between the classification and the object of the Act. We do not see any force in this argument either. It is at once seen that the classification into categories has relation to the charges for water supply and it cannot be suggested that there is no connection between the charges levied and the purpose for which the Municipality is constituted and functions within the fame-work of the Act. We suppose that an institution like the Municipality does require funds to carry on its allotted functions. It may be noticed that the Commissioner, who is the Executive Authority, has affirmed in his counter-affidavit that the Municipality had incurred a capital expenditure of 116 lakhs on the water scheme and has to pay the Government 6.9 lakhs towards repayment of loan in addition to 1.5 lakhs towards maintenance annually and that having regard to all these, the rates are fixed. The Executive Authority has thus stated the commitments of theMunicipality in the matter of water supply and it has necessarily to levy charges to meet its commitments.
(12) Be it noted that under Section 132-B of the Act, 'the council may accept contributions' from the owner or occupier of a building of any category specified in Clause (a) of Sub-section (2) of Section 132-A exclusively towards the capital cost of 'pipe supply of water'. This brings out the head of expenditure.
(13) We may also notice incidentally that water and drainage tax is levied under Section 81 (i) (b) of the Act
'to provide for expenses connected with the construction maintenance, repair, extension or improvement of water or drainage works heretofore provided or hereafter to be provided.'
We do not think that we overstate when we say that these water charges were meant to meet the expenditure involved in the supply of water. That is sufficient nexus between the collection of water charges and the object of collection of water charges under the Act.
14. We may notice in this context that the principle of classification has been authoritatively restated by the Supreme Court in Budhan Choudhry v. State of Bihar, (S) : 1955CriLJ374 , thus:
'It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.'
This is a concise and albeit a complete statement prescribing the rule of classification.
15. We consider that the water charges stand the two tests adumbrated by the Supreme Court in the ruling aforesaid.
16. Yet another contention of Sri Ramamurthy is that Section 132-A of the Act confers arbitrary power on the Municipal Council, in that it provides that for all water supplied under Section 131 of the Act payment shall be made on such basis, at such times and on such conditions as may be laid down in the bye-laws made by the Council and shall be recoverable in the same manner as the property tax. Sri Ramamurthy urges that such power as is conferred under Section 132-A is open to two serious objections, firstly, that the Act lays no fetters and has vested in the Council an arbitrary and unguided power; and secondly, that the power conferred on the Council was an excessive delegation of legislative power. In either case, the learned counsel would argue that the provision has to be struck down. With regard tothe first limb of the argument, we see that under Section 310 of the Act there is a check provided thus:
'(i) No bye-law or cancellation or alteration of a by-law shall have effect until the same shall have been approved and confirmed by the State Grovernment.''
in addition. Section 36 of the Act provides for a.check by the State Government with regard to She resolutions or orders, etc., of the Municipality. A perusal of Section 36 shows the wide amplitude of the State Government's scrutiny. Section 36of the Act is in these terms:
'36. (i) The State Government may, by order in writing --
(i) suspend or cancel any resolution passed,order issued, or licence or permission granted or
(ii) prohibit the doing of any act which is about to be done or is being done in pursuance or under colour of this act, if, in their opinion,
(a) such resolution, order, licence, permissionor act has not been legally passed, issued, granted or authorised or
(b) such resolution, order, licence permission or act is in excess of the powers conferred by this Act or any other law, or
(c) the execution of such resolution or order, the continuance in force of such licence or permission or the doing of such act is likely to cause danger to human life, health or safety, or is likely to lead to a riot or an affray:
Provided that the State Government shall before taking action under this section on any of the grounds referred to in Clauses (a) and (b) give the authority or person concerned an opportunity for explanation.
Provided further that nothing in this sub-section shall enable the Slate Government to set aside any election which has been held.
(2) If, in the opinion of the district collector, immediate action is necessary on any of the grounds referred to in Clause (e) of Sub-section (1) he may suspend the resolution, order, licence, permission or act, as the case may be, and report to the State Government who may thereupon either rescind the collector's order or after giving the authority or person concerned a resonable opportunity of explanation, direct that it continue in force with or without modification permanently or for such period as they think fit.' We are therefore unable to countenance the argument that the legislature has conferred arbitrary powers on the council for the levy of water charges.
17. Further, what is sought to be made a complaint is that these hotel-keepers are asked to pay more than the residents of residential buildings and are not given a free-allowance and so discriminated against. It is not suggested that the charges for supply of water to residential buildings are arbitrary. It is not as if the Municipality is for the first time levying water charges without any basis whatsoever. Manifestly therefore the complaint that arbitrary power was given to the Council for levying water charges does not seem to bear any relation to facts.
18. The second limb of the argument that there was an excessive delegation of legislative power is equally devoid of substance. It has beenindicated by the Supreme Court in Jyoti Pershad v. Administrator for the Union Territory, Delhi, : 2SCR125 that this is really another form, or rather another aspect of the objection based on the grant of an unfettered discretion or power. That is to say, from one aspect it is a complaint of conferring arbitrary power and unfettered discretion; and from another aspect, it is an excessive delegation of legislative power. Dealing with the ratio of delegated legislation this is what the Supreme Court has observed at page 1612:
'In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provision for them. The Legislature, therefore, is forced to leave the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act. This is the ratio of delegated legislation, and is a process which has come to stay and which one may be permitted to observe is not without its advantage. So long, therefore, as the Legislature indicates, in the operative provisions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation is skeletal, or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested is uncanalised and unguided as to amount to a carte blanche to discriminate. The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law.'
19. We may add that the Municipal Council is the best appraiser of the factual conditions. It does not function in vague. It is not as if it is collecting water charges for the first time. We have already seen that no complaint is made of the charges for supply of water to residential buildings. The complaint is one of excess relative to the charges payable for the supply of water to residential building. For all these reasons, we are not persuaded that there is any substance in these objections.
20. We may now consider the submission of Sri Sastry that this cannot possibly be a case of any infringement of citizen's rights under the Constitution as the collection of water charges is essentially an obligation arising under a contract. He urges that the collection of charges for supply of water is not a tax which a Municipal Council may levy under Section 78 of the Act, but a payment for water supplied to the Hotel-keepers. He has made particular reference to Sections 131, 132-A, 132-B, 133 and 134. Section 131 states that in Municipalities in which three is a pipe supply of water, the executive authority may, at his discretion on application by the owner or occupier of any building, arrange, in accordance with the byelaws, to supply water thereto for consumption and use. Sub-section (2) deals with the supply of water from a main not more than one hundredfeet distant from, the building. The Executive authority may by notice require the owner to obtain such supply and to execute all such work as may be necessary for that purpose in accordance with the bye-laws and regulations. Sub-section (3) provides for the recovery of the cost of making the connection and the cost or hire of meters from the owners of buildings. Section 132-A, which we have extracted, occurs under the heading 'payment for water' Section 132-6 to which we have also referred, has a provision for acceptance of contributions exclusively towards the capital cost of pipe for supply of water. Section 133 deals with supply of water beyond the limits of the Municipality to a local authority or other person or persons. Section 134 deals with cutting off water supply for non-payment of amounts due by the owners of the buildings and it also provides that the expense of cutting off supply shall he borne by the owner or occupier of the premises.
21. Having regard into the fact that the charges for water supply are not taxes and scrutinising the provisions afore-quoted dealing with the matter in issue, we see that water is supplied OH an application by the owners and occupiers of buildings in accordance with the bye-laws, that in some cases the owners also contribute towards the capital cost of pipe, that they bear also the cost of works for taking such water, that in certain cases water is supplied to persons outside the limits of the Municipality and that non-payment of charges due for supply of water entails the penalty of cutting off the water supply which would be restored only on payment of the expenses involved. These incidents reflect only contractual obligations, the persons receiving supply having applied for and agreed to receive supply agreeing to pay the charges therefor and paying them. These are essentially the terms of an agreement to pay for water taken at agreed rates. We do not therefore think that the petitioners could complain of an infringement of their rights under the Constitution. There is clear authority for the position that disputes about contractual obligations do not involve infringement of rights under the Constitution. This Court has held in State of Andhra Pradesh v. Adoni Ginning Factory, : AIR1959AP538 thus at page 164 of the report (Andh WR): (at p. 544 of AIR):
'Freedom of contract is one thing right under a contract or right to performance of a contract is another. It is only the former that is the fundamental right and not the latter. The Constitution is not concerned with rights arising under a contract which are governed by Municipal law, namely, the Contract Act. Right under a contract is not protected under the Constitution since there is nothing like sanctity attached to a contract. The light conferred on the citizen is freedom to acquire, hold or dispose of property. Therefore, the alteration of rights accruing under a contract is not an invasion of fundamental right, but would only amount, to a breach of contract. The distinction between these two is pointed out by the Supreme Court in Pannalal Binjraj v. Union of India, (S) : 1SCR233 and Kishan Singh v. Rajasthan State, (S) : 2SCR531 .'
We agreed with the submission on behalf of the Municipal Council that the charges for water are collected under a contractual obligation to pay at the rates agreed to and this petition is misconceived.
22. For all these reasons, we are satisfied that there is no case for interference by us. The writ petition fails and is dismissed with costs. Advocate's fee Rs. 100/-.